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Insurance Definition: STATUTORY ACCOUNTING PRINCIPLES / SAP

By Compuquotes Team on March 27th, 2008

STATUTORY ACCOUNTING PRINCIPLES / SAP:

Definition:

  • More conservative standards than under GAAP accounting rules, they are imposed by state laws that emphasize the present solvency of insurance companies. SAP helps ensure that the company will have sufficient funds readily available to meet all anticipated insurance obligations by recognizing liabilities earlier or at a higher value than GAAP and assets later or at a lower value. For example, SAP requires that selling expenses be recorded immediately rather than amortized over the life of the policy. (See GAAP accounting; Admitted assets)

Information provided by Insurance Information Institute

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